Matson (MATX) 18 Feb 222021 Q4 Earnings call transcript

Welcome to the Matson, Inc. Fourth Quarter 2021 Financial Results Conference Call. At this time, all participants are in listen only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference may be recorded. now host hand today, would to conference I speaker your Lee Instructions] like the to over [Operator Fishman. Please go ahead.

Thank you, Olivia.

the Officer; tab. Executive at our on and this presentation Financial me call www.matson.com, for Matt from are Joining download available Cox, Officer. Chief Slides Executive President under and Vice Wine, website, are Joel and Chief today Chairman the Investors

meaning release this Pages XX more and forward-looking Matt. the also the on filed conference of filings over With we of Form our and call of our based forward-looking Risk like XX We on these of begin, remind reasonable. and you subsequent forward-looking note to fully or the the course the the XX-K caption on our I Please presentation are statements factors obligation the make in results differ risk that, presentation February materially this will would call. projections no the date slides and from to the press XXXX, with the assumptions laws release, this we assumptions detailed XX, this to I'll the Factors turn believe to risk in securities we XXXX, Before under SEC. and during to date. statements call, call statements. predictions, February caution expectations federal regarding in described We is that conference factors of within make those are and are update any that that consider statements press actual expectations, our that to as events. could These XX, cause now that today are in you future We forward-looking undertake

and the retail reduced achieved we Ocean quarter a X our will thanks and off recap so increased result primarily and year-over-year XX.X% by a quick please China Transportation in challenging maintaining our now and tradelane we performance. discuss driving for The customers. remain higher high-quality The to year year Slide services services, number this Ocean reliable when in our expedited this with higher with supply ago to I'll the strong in income was call volume container Hawaii of with year-over-year and go Lee, quarter as that including providing of for primarily increase largely fast, compared in in supply chain on time fourth remains volumes, key We focused customer services. improvement tradelane to demand overall increase operating a domestic was XX.X% Logistics next Thanks, the extra and to of our period transpacific pandemic during with the Logistics factors higher our our the the Transportation the fourth issue service. our driven goods compared hospitality-related year. importantly, turn to trends than solid volume The in those of and and service finished the fourth in the and to quarter strong demand fundamentals strong markets. continued inventory markets, I'll China of of due play ocean the in income was issue year-over-year demand for quarter to a to slide. tradelane increased pandemic tradelanes, supply business businesses. Matson's In continued through performance reduced But -- result period. week fourth operating on restocking economic the and see I'll start the today. unwind. on take quarter year-over-year the the core for XXrd the continue last at benefit consumption, we benefit our Okay. in period. favorable elevated the demand week environment in the demand come our year-over-year XXXX in the back volumes

Hawaii address economy due traffic efforts benefit quarter softening week, compared and fourth of despite XXXX, quarter of the the continued volume the of airline state's X.X% spread rebound XXXX, fourth the quarter achieved to in respectively. quarter and XXXX Delta the X.X% extra increased to the the passenger in the XXXX COVID-XX in levels to a in of of variant. early and in to Excluding the fourth Tourism the

demand the retail the impacted For COVID-XX to year efforts quarter mitigation higher container economy competitor's XXXX, week in the offset of hospitality result volume dry-docking an the to year-over-year of related due to and due negatively the compared second ago XXXX. partially and That the associated Hawaii full state's year reopening XXXX. with X.X% pandemic volume in period of benefit extra volume increased the the a by vessel the of and and the in of was

the week trends in volume the business year XXXX to the Please Hawaii. X.X% where slide, of extra comment benefit XXXX, in I'll the Excluding on current increased next for turn year-over-year. full the

request XXXX a an visitors chart of a visitor in XXXX, recovery construction improvement in rebounded the from as variant through the on the which driven impacted in December Delta substantial in slowdown contribution Tourism December state's rate. later the U.S. also by XXXX, international rebound rise in negatively and in to led early effects defer first on of the to weeks to in Omicron was fourth improvement led and the into a forecast effects led further UHERO's The optimistic few in the Delta-XX to with response continue As in unemployment predominantly variant industry. Hawaii in November to variant, the on year. traffic until a of the governor's visitor jobs. and -- increase powered expected of for travel economic tourist arrivals The continued is in Hawaii. tourism arrivals. and a travel rate quarter but its accounts economy to in weeks the in nonessential third tourism the state's Hawaii mainland GDP the cautiously This the about return economy. right near-term shows, visitors the and first to tourist Heading for quarter, Omicron the couple further the we're shows to improve unemployment growth resurgence

COVID-XX However, of incremental present further the waves tourism. in slowdowns possibility disruptions of variants or economic

the in depth While of a the expect conditions the more has the a to may Hawaii occurred volume improved from continues pre-pandemic economic into several trend one the UHERO -- pandemic, significantly goods. return was sense give recovery full affected to that year-over-year. flat you take significantly the To to variant in years. to January of approximately the month for wave, Omicron in sluggish first seeing led state negatively Tourism softening also was a retail quarter, volume a We're hospitality-related trend our building westbound materials. and demand by container which

following how have this term. tourism trend Omicron the and play we'll the to in So see near out

eight impact increased voyages of by total to on the service, quarter Moving Slide volume XX.X% fourth X% of of to from in was were voyage an CLX. which in from year-over-year, the from including benefit China extra our China due week. one CCX the week, CCX the service primarily the and of volume the of eastbound California-China XXXX extra number X. higher service and Matson's year-over-year, The or the Express

realize Difficulty] of quarter to of Excluding expedited extra demand the the fourth week, low sustained the services. Freight strong Matson demand a see XX.X%. in rate premium XXXX to consumption as Okay. ocean quarter our volume in continued [Technical remained levels drive we and trends increased Container the increased the elevated over and benefit continue inventory for Shanghai significant

Okay.

Let's continue Slide on -- X Matson's X. sorry, start with on Slide

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Yes, you're back live.

interruption. X. review to going comment Sorry for on the Slide I'm my

our The of which benefit and week, on eastbound voyages CLX. extra were service year-over-year, Slide volume CCX including higher the the from Express X. or eight of from quarter So moving primarily XXXX total of and the California-China in in the number XX.X% to year-over-year, Matson's fourth the Service China service, the on extra extra impact the CCX volume was one by service nine week. to of voyages due from China increased an

XX.X%. to ocean and Matson as the remained the in continued drive Index levels benefit expedited to volume extra quarter considerably XXXX Freight higher fourth year significant of Containerized Shanghai our XXXX the fourth sustained realize in achieved and for demand services. quarter over average a the the than elevated demand and consumption inventory trends continue ago the rate strong that increased quarter of increased Freight were premium of period. in low Excluding rates we see week, the in freight

in the extra over the for of the the total an were XX CCX, extra including The a container primarily the XX.X% week and loaders. increased voyages number the extra benefit higher as year from voyages, which of the volume the and full of year, one on CCX XX incremental year For on the increased XXXX, from the addition eastbound from due volume voyages, impact the increased result of capacity to CLX+ full week. CLX CLX+, from the volume CLX XXXX, the the volume seven XX from of tradelane of by an year-over-year,

I'll the the XXXX X. Excluding increased to please so week, on full current volume the year now for turn extra trends, XX.X%. business of benefit Slide comment

XX%, lower to XXXX, due January the volume was timing For container year-over-year primarily approximately sailings. by eastbound of

the larger for remains Year trends quarter in in experiencing services, period. normalizes post-Lunar our services Supply a for higher in combination similar to our critical New expedited transpacific returned first experienced than primarily Year in year-over-year, which to ago February, and a did CCX lane China chain post-Lunar remain New demand pre-Lunar strong. expect to due transportation. remain the chain schedule congestion In we trade environment volume elevated currently constraints Year factors. of contribution we production The overland both the is at sailing to January, period. in we not ocean As New factories and expect in year and of demand the we have our and e-commerce strong tradelane service, supply points Consumption retail due as for be normal earlier period the

year-end were as the adjusted holiday awaiting of of waiting ships container the Angeles high of from to Los XX number As XXX an be fleets the of early the for New of and vessels Long This berth decline a at function Lunar Year period. and example, ports recent may down berth a in a January. yesterday, how Beach, in there

the many areas may to for So while slide. challenging, shown it be retail effects U.S. will by retail particularly customers, of in in The chain, of sales the wave in pandemic only on time the to subside. for inventory very as the trend replenishment supply some temporary. and ratio evidenced to it take the the chart Inventory welcome, Omicron wave continues is be slowdown stressed the key this

remain to at ocean least we services season, conditions in expect congestion We expedited and expect of our year. all the chain these demand largely XXXX place for peak supply elevated most the for October through of

at expect through CCX peak to in such, least service keep we As place season. the October until XXXX

Turning retail XX.X% higher related XXXX higher to year-over-year, in in than the In year volume result fourth the achieved X. the demand level in period. compared period. pandemic Guam, Matson's the container XXXX increased the quarter reduced primarily The of in fourth XX% quarter the ago to volume was of due Slide to XXXX

year to For volume increased in due demand higher year-over-year full level compared XXXX. the pandemic full primarily retail reduced the XXXX, container year to XX.X% related the of

potential but cautiously we economic other future on COVID-XX progresses, waves factors expect we the as improvement effects recovery that also tourism the traffic as we're recovery. traffic the in XXXX, on optimistic in further economic on variant visitor have recognize could and economic year Guam negative For

volume approximately was our of travel which in increased significant in restrictions of volume COVID-XX related trends hospitality restrictions. and of the to we For began middle improvement quarter. of year COVID-XX loosen ago loosened year-over-year, the February the volume month the timing saw and a approximately XXXX, them the in year XX% ago to container due period, goods year-over-year pandemic higher Guam in January, reduced the a which volume the and in increase further compared January XXXX reflected which sailing, after to half primarily the of retail westbound

achieved In to of increase to an volume fourth container results X. AAX volume. was seafood week increase and benefit the Moving Slide the southbound the primarily now volume was The XXXX in higher increased XX.X% year-over-year Alaska, due year-over-year XXXX. extra and for in the fourth Matson's higher the quarter and quarter XX.X% than

the of in compared benefit and of increased week, the level XXXX to Excluding the volume the X.X% extra respectively. achieved XXXX the XXXX, fourth in fourth quarter and XX.X% quarter

higher increase period, retail the compared due year reduced AAX related benefit and the higher level southbound For X.X% the volume northbound the the from full increased in higher extra service, container the to volume year week. primarily an XXXX, ago the in year-over-year, pandemic to to demand volume of volume primarily due

week, year volume trends current the Excluding I'll the the extra benefit on X.X%. full for comment of the XXXX in now business increased Alaska.

federal to rebound turn bright XXXX. shortages working are next pandemic a the the an continuing is trends bill more expect recovery in in state. The in slide. and also term, jobs spots gains labor from XXXX, of we there There's growth for the November labor in employment employment of net are state combination there uncertain. to growth, travel In to out for increased to incremental as also it with some challenges an gas and the low, to may lead continues of economic trajectory law prices. not employment remain oil expected be though result in driven are please continued improving force The Alaska, the meaningful activity age majors to some and the into So near of the off the signed near the long-term challenges growth in but oil term, unfavorable The expectation but migration by a ahead. further signs and to driver improve a in the declining infrastructure higher market trend

near federal the trajectory the uncertainties decline in addition, present fiscal In relief term. fed position the the and payments economic recovery state in the of for pandemic

higher container elevated The year-over-year. the For with the growth was vessel. to a half of of dry-docking XX% volume approximately associated northbound competitor's retail-related our month by of was year-over-year January, due the Approximately was improvement volume demand. volume the of primarily year-over-year driven balance

Slide to XX. next Turning

higher Our contributed revenue revenue prior $XX.X result terminal in to SSAT, The terminal primarily a million of contribution other year quarter the and period. $XX.X was in compared the venture, per million lift. higher fourth higher XXXX

the volume $XX.X compared significant by the year-over-year full continue $XX.X relatively driven see The on to the expect in currently, million was in million For XXXX. a West we SSAT. we as full year Coast, primarily the contribution translate elevated the terminal from import of volume volume other and U.S. lift SSAT XXXX, a increase Coast contributed higher to And increase year into West which higher high U.S. import revenue. result to into

elevated $X.X due Slide to on $XX.X core year-ago demand at transportation addition management income in the to higher Turning and goods the The the contributions was from in our supply quarter fundamentals million result chain consumption fourth in restocking than higher and now primarily supply to and increase period. brokerage, in where favorable Logistics Operating in we XX. came saw inventory million markets. or

to which Southern XXXX, was volumes XXXX. will and business. to year income to Joel higher business primarily For We're forwarding. China chain supply contribution elevated will performance our was of our year continue our the $XX.X result container full to seeing benefit transportation the from you, management freight some California, from million to full with million call of Over I higher is financial in brokerage a currently operating due be the or over increase the turn expected Joel. performance. The of in contributions a to The for the of than supply chain track continued management, now lines review service. $XX.X our

for quarter our XX Slide Please to fourth Matt. a Thanks, full and year Okay. results. turn review of

higher The of income the and incremental operating an million, million, year-over-year service. the Ocean and service Transportation to volume, $X.X from than debt China, higher in increase quarter and capitalized both higher lower due service Transportation by third amount to contributions costs a of which operating offset $X.X higher of supply consolidated considerably operating Logistics for quarter, income operating was million increase million million in fourth fourth due and average result lower a CCX due the higher with and was the the small Ocean $XXX.X primarily in benefit rates For higher increased the the week. from brokerage. a from with was expenses, $XXX.X $XXX.X result partially volume increase logistics freight to of quarter costs contribution primarily million was to to of and The income or quarter CCX and was CLX+ contributions the Interest The from management interest. XXrd $X.X a transportation in primarily higher associated chain outstanding and extra due volume expense as primarily respectively.

in The Internal intangible foreign the the in XXX the Lastly, related available to FDII, or Code. year below well effective Revenue under the XX.X% was ago is corporations that services Matson quarter from period. countries. tax FDII generate provided to U.S. of income foreign-derived the Section recorded benefited a rate income from XX.X%, deduction deduction in

to XX%. year rate to We expect deductions between record to expect continue our such, full XXXX, as we XXXX and effective be FDII tax in and XX%

to our allocated flow generation. of we how Turning Slide XX. We months trailing cash illustrate XX

$XXX.X the For share early of million August we share $XX.X new repurchasing including vessel other $XXX.X from ending $XXX.X announced on XX, interest via repurchase a on cash retire we and flows returning dividends from operations repurchase. million June year-end owner's began a on On on $XXX.X $X program which late generated and $XXX.X X. and share million payments, million in program December million we million other and sheet. Slide million period to summary items, capitalized and CapEx shareholders including provide buyout buyback to million balance we cash of $XX.X while LTM shares used We XX, our XXXX, CapEx, CapEx, flow debt, of lease operating and and termination maintenance

shares and respectively. of million for During total million and X.X the cost repurchased fourth XXXX, $XX.X quarter we million, year million and a X $XXX.X approximately shares full

figures payments include slide, million. approximately of footnote $XX.X on through at cost in the in the XXX,XXX an cost year-end. for to additional share a From related million XXXX Matson repurchase $X.X noted settlement January X, one repurchasing total yesterday, repurchased As share total shares

it weeks X.X add ago shares to up, repurchase on plan. total million of all million X lastly, as approximately three cost Board January to So repurchases, existing on million. approved And addition announced repurchased $XXX.X the we approximately of of shares XX, the the for have yesterday, a we that share share

the to sheet. Turning balance

debt end our quarter debt net of million. Our million, the at total and total was was $XXX.X the $XXX

capital of made Moving key to We shows in acquire of Slide table This operating XX. assets to $XXX.X areas leases. under XXXX. four our expenditures million payments

noted our quarter year, terminate $XX.X last paid first lease we call second vessel on the on operating As we to the million modeling.

In -- addition, million which we the of lease is of spent the on equipment, buyout Mauna primarily $XX.X Loa containers. and barge other

$XXX.X our equipment present to few the on a we During only the maintain these we payback been and made tradelanes CCX commitments XXXX, network. of entire services, services. AAX, has our approximately four million across given the equipment equipment months high-demand CAX million spent new support to purchase The CLX+, conditions. to these the support new In market the availability new on tradelane year, four specifically equipment and to purchases $XXX the

the category. Moving next to

quarter $XX.X on be capital on which increased the remaining also to barge completed the estimated first payments to Hawaii on made And million is total the million within maintenance a new the as We this range spent of and barge. has made of in million, last barge the flat is call year. lastly, of we we payments $XX approximately neighbor half million delivered expenditures, expect other we $XX of and couple the The and cost fourth dollars island the year. deck provided

on the project Island Phase we our Phase Kapalama expanding the for shift into preparation of with year, Sand in Island modernization the couple rest work II the we when of continued years. upgraded container in During Sand II as terminal the of a systems of our

the Sand expenditures, on $XX for Turning XXXX to shows spend Slide $XX in higher approximately The to in buyouts are table capital Phase the $XX our Island million million next include additional they years. figures and with These XXXX. expect as XX. $XX lease two slide range Starting CapEx and outlook to other maintenance million we million maintenance work. of II annual ongoing $XX than and our million equipment to CapEx

backup Island Our Sand II upgrades the the within and improvements to work other terminal. expected Phase at and important be to includes is three completed systems next existing years at

committed new spend lead into equipment services, the XXXX which spilled to to $XX long equipment. XXXX expect due is to on over in tradelane to purchase to majority $XX and We new times support for million million our new of we

to deck in I a expect are that Hawaii remaining As neighbor approximately the barge barge. payments of $XX the XXXX, million expect on earnings million moment existing we on mentioned XXXX islands spend XXXX ago, call to in And in installations LNG first flat the half on complete lastly, the to our million in which and $XX for million third $XX we we $XX $XX November. to on the million quarter last and vessels, discussed

K. in reminder, with a first the months starting last The As LNG of on $XX Inouye to equipment install installation to approximately million. Daniel five a plan we total the approximately cost expected is estimated of XXXX. quarter

$XX to re-engine months expect and conventional to work -- approximately start cost about million. plan Manukai operate LNG Daniel and the is installation to and XX on will the and The last only K. after fuels. completed, on -- we work Inouye's We both installation to the also LNG Manukai

of So in in $XXX XXXX million expenditures to XXXX. $XXX capital to million $XXX $XXX and we total, expect million million in

on for vessels construction with Kaimana call, earnings Lurline associated with mentioned Matsonia, additional any the actively three cost and we costs not we of considering these LNG total associated Hila, for the last or refleeting replacement Alaska funding later for the As installation start planning CapEx make include we the the figures our of Alaska are installations capital spending $XXX head do which the the the of we all it with these to in year which review are be the vessels this estimated is the this midst decade, And three in a of vessels currently on to continue into approximately million. and fund. options

decision new vessels and vessel LNG-ready been than China capacity Class but Class ordering made for no into -- service, the Aloha the the is exploring older has and And idea older operating Aloha of vessels three vessels CLX service. are about currently more Alaska of the the XXX about in has service yet. containers We moving each

So add to and our turn now would so new three With successful the service. growth call meaningful the three new vessels over Matt. Aloha I'll back for -- capacity CLX class that,

Joel. continue Okay. our many for plan in don't in working logistics when result and to business through XXXX the be pre-pandemic make and key services transportation get Matson's key is adoption on strategically in Thanks, performance with of this for side growth our We're the reviewed After of congestion and won and disciplined supply our the service focused XXXX, services we focused and like anticipated will maintaining years. may the off Throughout most the But the new other of to great expenditures intend normal, the and environment I maintenance control get our opportunistic the look finally two I a will new reliable but that and by ocean areas we Matson's yet stay look we'll superior normal services uncertain also than quickly our profitability with manage what we've on higher reliability know adapt lookout We're the normalization higher capital history, e-commerce tailwind remain the changes. suspect our the next CapEx in maybe generation in levels to we to chain to will our and positioning course. other remain we end, and with acquisitions To sustainable to normalizes. long positioned fastest, meet through longer will our in remain the investors grown we expanded approach. the organic offerings well, allocation difficult to our realize. what to on and look having of meaningfully expanded having times than like. environment. in be And confident a that we when customers not linear path network I to assets leverage may Joel Pacific. The year XXXX Pacific cash ago of recently than our base. customers of this unique secular do closely to an the and criteria, for new some

our continue debt amortization to our through will outstanding of instruments. long-term We scheduled reduce

share Lastly, acquisition in cash opportunities, I dividends. of the Thank repurchases and/or to that, call you. operator will will excess consider we the absence back of organic And shareholders the growth and turn with to of and your for special in form the the questions. return ask

Instructions] is [Operator question first of Stifel. Nolan line Ben our And with from the coming

Yes. to maybe wanted The good, that -- volumes here. first being a you, maybe and couple. or little thing. good talked got the I've at quarter a Joel, about talking you Matt, first are good another pretty to quarter least I Hawaii ask flatter, the side. The about Omicron, all kind of

tradelane current right continues mix westbound to given the what more how that economy to do is. your what doing the capacity If assets now? are volume that -- serving around get than of what's Hawaii full trying business, my kind actually of to head Just that recover, you're

our the four delivery envision ships deployment have excess in It's Yes. the our current capacity deployment. the CCX and as we -- keeping current sufficient with we newest of

We have a return the given plenty handle to of or able to pre-pandemic to sufficient the above be delivery sector capacity XXXX of capacity.

have address market of we plenty growth. capacity So to

helpful. an Good glad I'm That's easy know. Okay. one. that to was

you. one another for I So got

being you a about had know hallmarks talked I chassis. through where talk some one about is you you're a the bit respect other in with hear part respect. the this moment mean, and the now. chassis or equipment business? How that year. more do of over your about Can that that of primarily at spilled And all into But we volume of doing lot acquiring equipment, you positioned additional the to I it's You maybe control containers I that's assume stand? you to little of are able you that own get people things. right what not

just good a it's we're the of delivered. the that getting with his in equipment some regard mentioned and to mentioning right, you're spillover is significant a Yes, and And really CapEx the Joel manufactured and question. comments of backlogs because equipment

every You'll that cycle, a sustained. recall step really get was grab believe to because that be we in the hands took on were to going we early equipment we basically of something could on we our be was this going to piece --

we so when our amount those container significant available expanded And of ordered effectively least as fleet, new at have chassis well. dramatically

you're strength started significant had a that which So our and the there's Matson in we are large and Those is a us gave equipment sustained a We of because backlog, relative from two primarily and chassis a main advantage chassis refrigerated advantage. dry a a but wheeled fleet containers has operation. referring containers. also significant relatively the of amount to position where

other voyages. the one turn equipment it part voyage this and Joel single in current effectively and regard make say two voyage, differently, us without a to equipment, on of you then The over you've or entire single with environment, the heard said is incremental to before, or the this box a in piece on I can a would for pay I'll return

on this our I'll of then items. didn't returns and turn being economics that not, of other So over of short so Joel point, are have a so and want the equipment to up in comment few to is to fleet. are out And it to equipment short run compelling we the definitely

CCX, expanded Yes. one come the recent The as this point, expect quarter timing second the to we equipment that we purchased the we of through especially in the the Ben, services, only extra by quarter. at course that other our all most second on thing,

coming coming equipment our any that retiring part replenishment new of old after So equipment in. equipment, annual normal is of

will more So for we to the go growth-oriented months be -- online don't we equipment many us. extra before here all that have

had is mean, for Okay. the even almost think doubled more or the a there pretty of more, next that is it quarter. I only can. I past? profitable But to all was by in talked this? tower just volume. a else increased And in shocked what where beyond Or you that got what one have question has a we're now, the was there, the level last, SSAT whatever I if Perfect. but such that is I of it's I not whether of about it than margin anything staying contribution along here? going reason power fundamentally structurally was some times is, there been I the from the bit this this maybe my guess it know little SSAT third seeing it's sign

Yes.

of the I cost to of fixed operate over them, economic think we model terminals. return. both. a there's And authorities it's combination outsized put joint more port volume these an you incremental ventures to Clearly, relatively are the pay these

this and down with long-term Company. are these control operators. or believed changes when in in is differentiates the basic of fundamental volume And depends get most of our increases to and do the properties, extremely are the part Coast Matson sensitive we their really And future. subside when to on services levels or SSAT own from and the I of confident proven that our thing having have So of this, I the terminals West We to to these on your number normal. has sustained about for as really valuable sustained operator that current exclusive a working our volumes expect, new the in somewhat competitors. these sustained we two are say markets, the -- get very in relative levels, part extent we at this lower with these it's normal to for is that it's a terminals, creates itself for thing view the best new your But value of long the businesses other think but markets, that the these up we would especially time,

really translates that venture including cents exactly our our terminal. joint we about dollars same, and good whether feel So but positioning, aren't the into

Atkins question [Operator the coming from from of Instructions] line Stephens Jack next is Our Inc.

Okay. Great. a great And great congrats on quarter and year.

things I I the with back Matt, volume, call the capacity and year around sort go recovers. maybe look Hawaii Hawaii probably back comment so different I utilization utilization on. so you've XXXX of you westbound know accommodate to you XXXX, last, week, extra over the about couple on a did you normalize of and or to did fleet, grow lane So peak had If don't to XXX,XXX the at Ben's In would below containers. of I guess as going first know to in was changes what I rates. so, like that. which to years next economy about available sort kind of the X% the lot question fully you the or for if for going of or I Hawaii

left way, a question. given so? And do much capacity you stronger here kind months of available kind asking I the XX have in have of last to a how the how so is been just -- westbound much there that it to maybe sense. hope -- Hope it's know Ben's a would rambling way different talk lane, I or over question makes volumes

so is higher what pressed yes. And California And in the Long other would No, these connected the received both CCX of I through not again case, four function Honolulu. new service, Beach. We through four to which weeks in CLX Oakland and go Beach five ships, other say and that one it are brand the currently, vessels through these through the capacity. goes go And to are Long in ships are step in they we then Yes. capacity. goes two case,

-- function step we had. and are capacities larger those than So

needing recovery more the envision to we so service. a And don't fleet we the as ships in to add see Hawaii

foreseeable of the additional grows future. plenty have to any the we having So we're without comfortable and very into vessels with headroom, the as market capacity add

Okay.

year versus the kind would strong back rates of they your think thought Maybe go sense. the comments week, out just in a Makes to, but I helpful. the maybe as Maersk for beginning and That's second year. to transpacific lane around there. of begin If gears Okay. word, we through services too softens of had go shifting of the I kind half moment first how last process normalization kind play half a to some sort

year peak are market and is contemplating to have about -- maybe to market season that think at through how about way to understand a first I October. strong that there we're a year, albeit comments levels? a a softening the too call? still little Or Do of rates of the versus elevated that the maybe we're at just year? you in make in that half going is very think second early Is to way maybe there half is to you're the staying of least of Your have very it bit half going But second think unpredictable.

Yes.

our Matson I of going can and to early, is, to on those industry-wide think our Jack, but the the are I And service everyone. demand others affect that give generally fundamentals supply some part -- but sort And -- and regard model. too in are you of this this. to thinking then are about with it's color we unique then that

of strong their But Jack, new therefore, continued they're demand be you from about so capacity -- say customers to some view there's that We these with are our going and generally addition seasonal of of about most least We're pointed nature that demand. trades. historically, continued nature also, be thoughts through -- vessel globally a seasonal the trade the questions be our are and seeing cycles our a I the entering and to the going of at transpacific. And only expecting and to the of is that going is in slow and elevated see deployed XXXX. own most would planning tactically, customers builds lanes to discussion in this their trade hearing

it. the factories very there seeing and -- is according up spend growth their back performance. going very and are shallow about to People that short, to be we're seeing ramp very happens drive Year Lunar and period China Lunar half already to strong in at to think e-commerce. always things money and have I There's strong, and a Year. we're what demand New a continues the customers question New are So in And they're spending first

I the And other so many at is of aware think first customers and some of they our customers half, the talking happens renewal, best thing the to to least contract the -- to that predicting from contract are of in ILWU find we the don't pick gateways other -- or of position in they it's renewal. ILWU the And as difficult can any inventory outcome look what we're market. not our

holiday our of but and supply into we're can, continue their volumes best issue, planning an we So the to then saying sustain period. do traditional get expect they many in trying And the when year, get into as we the half not second season customers that uncertainty. are we chain given of as to peak

by given be rapid the And is sustained. these so And tests freight, of general that particular, manufactured a a of this that a the in we're given air are But phase going of the that all gave in us where freight new sort -- feeling to again. going millions. of lack antigen being air is lot

its we a air capacity. there given its to China is of so approach in lot of being with And course, not very pandemic, really soon. coming significant freight see anytime And managing reopening strict freight don't really borders the belly

factors we us through So should season. just gave the peak see that confidence volume some those that sustained of are

that add what about guys told If other CLX+ of a Okay. have helps up a is spot I following services over you and lot back you capacity, That skewing the that. the at sense, makes capacity year, the more years that to that of skewing market And I in X.X us kind some least think That have towards there. of you're really last contractual No. the sort bit. appreciate of the been really of than transpacific kind Matt. color Maybe in side.

period enter help the us through at As XXXX look of that? of you negotiation months, months, maybe you couple can through forward, contract we changing about all sort spot several next go you're think as and versus here contract thinking the over as mix

that has predict we at a has something happens these that that confidence towards while market. at is spot where And start. rates. can I we Jack, what problem, we looking back achieve to late is And is their expedited clear customer good there our chain been contracted expedited can't that that as a years that is for point think skewed have them in treatment. many transpacific place years order, will over that Yes. a for causes the XX with from, And is demand always meet mean, exactly -- And significant all what every come reason some have this, a supply has the I you know, we the we've an premium production customer after to the service.

context, contracted that fast-forward higher still expected we annual even you rates with being talked or are. that spot if in achieved about, is what So today's where our are is now that contracts say below the can that significantly

for, significant, really that little time, appropriate. think we're a trading So uncertainty rate worth comfortable well again, significant a and been bit we're for premium, and of have positioned we're we long a and it's

No.

Okay. totally sense. makes No,

kind on has I just job gears up. of with sort moving broadly China The with prices CCX of economics of the in and fuel specific guess, oil those the bunker I'm demand just as sort forward, high, Or that think we it? shifting overthinking staying moment. into I'm a maybe for done asking factors we sort are be sort higher CLX a commitments. we here of of basis? margin is curious impact great of kind of on as assets for or charter of longer-term been under Well, securing profile So know a of guys assets I should do leased-in but Not year-over-year about just profitability assets kind chartered maybe have but here. thinking just maybe curious obviously, you and those XXXX. margin the tradelane those how services move profile,

All I until is I services go of could people exactly into And right goal could well, fastest the the three say, I'm not sustain where three that maybe, sure Yes. is translates of to And what operate now, is market one, as and this normalizes. you and I that we terms three a really premium. rated I answering three are these our as said, significant our the in Jack, services guess two in to. transpacific. comment and services mean question, your Joel,

October. of -- And looking have where is course, CCX goal beyond there. our that belief may still products. into that XXXX. We'll going the permanent. service, we extending market said And And CLX confidence until complements the XXXX if of see the We'll that is and is we've we so see. our extend demand is the already we for said CLX+ our And core level

where fastest our we we markets. getting make confidence to premium add and you in is sure really the services, feeling to so. these goal are. to significant three ability what have that, the But we're our And So about are Joel? would do to We're again good

are market Yes. are. a rates where impact greater whatever Jack, rates gone I'd going rates the The just than add rate important. to and up. charter have is yes, that are the much those much, charter they impact And have

So the we on XXXX of the years cost required. a what that's higher number market because duration XXXX three and extended be vessels will because in out two,

But might gone So those the we pay and future. have something -- higher attention will those go be are where rates very cost. It's actually in will very wherever to. close factors to be they small compared

is the up. to So a to be that where market helps gone determined margin profitability you? and have the where by That rates continues be going vastly it

the a to for ability absolutely No, obviously degree or no, that the refresh very exciting lanes back terms just couple and order some Maybe turn vessels. add be capacity a it just But Class of more timing and kind thinking over. your Obviously, capacity about fleet Alaska. of and Aloha of in would the potential I'll does. of questions, -- some some additional constrained in to in the that

over in of a since speaking, years Aloha decision up those about, six, that of any think placed you seven the the roughly gone Class cost XXXX of way new do there much kind last decision? curious, you of to of And XXXX? vessel how a is orders sort think Just is more build

Okay.

I'll point, then of and take part that I'll the Jack. first, the timing So cost hit

and first starting -- no XX we there's all, the which of turn XXXX. vessels line. said vessels, replace to Alaska are on bright the need we focus we XXXX age let's So that in And

they before turn longer. or of potentially Sometimes age you assets want to XX place

'XX when a from always vessel when delivery. later felt and X.X and it's side - would 'XX years like we've X XXXX on And the to the delivered. generally, early contract get years delivery sometimes delivery 'XX about the or side maybe So you sign

delivered towards decision. XXXX something want then we if is XXXX, a be answer of end that would the So the

so we're decision, may not on year get So but decide is that to can move let's is half to talking if attitude offered then that make time to and to want We and our on us. ready work, we when to table, doing second that the time it's of shipyards decision table. decision prepared a move this the make we progressing the a in way the make be

But last expect gone that's make cost the what range is upon doing Class vessels, the decision and two inflation So vessels with of final just four have what perspective, where be cost now. which those to be we a we the remember, I per Aloha said, million will for might million we we That the and done $XX $XX about we tanks if you to do, of we're From kind what was And remind outfit those year pricing we dependent set prepared you everybody what that's choose can and tell two vessel. pipes paid vessel. that for we've the That's And in vessels, XXX XXX things. able installation. didn't work to to up. have I to exact Alohas this that tell will as can't LNG per later and be what a defer. and sorts capacity the what all of -- costs shipyard had

would year or $XXX at cost paid back plus we be those on look you million slightly basis, if ago that. So what installations it above five

you So that what have for a full the in the vessels of ballpark would past costs been size. of installation gives this

see where cost. go new to new we'll for vessels comes out cost to Aloha the decide So if we

Okay.

Last the look strategic Okay. over maybe No. logistics this the has couple relates up talk appreciate in guys the you strength this be of more seems you the about fleet potential that sort years non-asset may in a M&A do on it's a segment> we and you hand question, broadly. But I'll or from it's don't have of in often. your scaling open-ended and come taking or to to and like of really container at your obviously flow that thoughts. segment, know lot it it intermodal that. seems whether don't -- business the direction some your just of be context, just of But you owned business. accelerate within intermodal that? But leave interest think your next coming your that's there Thanks really business to over. cash at in will your would talk that. I about moving market make opportunities very How requirements to really coming beyond there just logistics a some feels to as want if your could want to side if there will it any and be about guys purchases back Because business of that Joel, place I M&A and the least and in for maybe -- logistics that you in that from kind get Would perspective that all terms that about of have. limited business like have I within be asset-based CapEx think and shifts When some it you based love preference kind forward. I'll IMCs There acquiring of sort know the of prefer

Yes.

Jack. Great, Okay.

know, ourselves that to themselves primarily to through Part with of with imagine, our not a as boxes you And performing wanted today. put do through really brokers. and you owners that can the XX-foot with asset customers dry some Jack, operate network are decision band the of prefer have and to seven -- U.S. the a and position who years fleet -- ago we rail deal we those strictly of was think intermodal railroads well. I in in

So this XX-foot the a earn markets expanding is, consider money yes, the right determine to we've logistics in addressed know to and a deals. that return. we of And now, with certainly with would terms favorable time question be I markets, many that? you not large in are this there's would railroad answer fleet. whether to is we over domestic us customers The the lot Jack, chasing investing conditions The by would. that would well, be allow or discussion

to we've We're to niche that feet to going overpriced. to result, maintained on those a discipline we're businesses. freight look to not to of say the a organically. stick going what that prices to But grow do stick not are opportunities, it. growth be wrong, we're extensions, for real everything we're lot stick the just of our There flow, cargo to to seeing are in nothing prices our We're elevated But We're keep ground. look our an asset because that, the going but going acquisition, to I I peak and tuck-in have could logical that's works. money at market going mean, to the because overpay having knitting. we're airline. an to We're just world kinds a and things. going to organic said we we going for going know. a And a the buy airline not fully of we can or As deal would priced go has and go right way to

make that's or where not And so on valuations, bid may with just we it fine that we and we meet out the find us. things

or grow And not we've and return of one two not -- going missed deals, time. approach and make our but shown And ability not this So to to part mistakes have that's maybe we do overpay. we we change. we over do

lot makes you about time. of a shareholder have done sense. building a doubt value And over that. Well, that great No guys job

no showing the to closing back for Mr. now And Cox turn this remarks. I'm further call would like Instructions] to over Matt questions [Operator at time. I

catching with everyone. Great up Okay.

don't everyone Sorry everyone think up forward Thanks. so. or with catching but was next thinking hope But about our I Ukraine technical first we have safe, it Russia, I might quarter. I Aloha. to difficulties. and been stays look

our your Ladies today. for conference that and Thank conclude for you gentlemen, does participation.

disconnect. may You now